The Social Security Administration, its Office of the Inspector General (OIG), and the Michigan Department of Human Services recently announced a new Cooperative Disability Investigations (CDI) Unit in Detroit. As part of the nationwide CDI Program, the Detroit Unit will identify and prevent Social Security disability fraud throughout the State of Michigan.
Category: General
Federal Income Tax and SSDI Benefits
Social Security beneficiaries may have questions about whether their retroactive benefits and/or their ongoing monthly benefits are taxable. This article provides general federal income tax information for SSDI benefits. The information provided in this article should not be used as the basis for specific tax questions.
When an individual receives SSDI retroactive benefits and/or ongoing SSDI monthly benefits, SSA is required to send a 1099 form by February 1 of the following year, specifying how much of the Social Security benefit received in the retroactive payment was really a payment for a prior year (or years). If a fee for an attorney was paid, the 1099 form will list the amount of the attorney fee paid. http://www.irs.gov/pub/irs-pdf/p915.pdf. The taxpayer should double check all numbers on the 1099 form with his or her Notice of Award.
It is a myth that up to 85% of SSDI benefits are taxable. The 85% figure only applies under certain circumstances. See IRS Publication 915 (2013), “Social Security and Equivalent Railroad Retirement Benefits.” If SSDI is the only income in the household, it is unlikely that the SSDI will be taxed for a single person household. If there is a combination of “substantial” wages and/or other income, the non SSDI may be taxable and a portion of the SSDI may be taxed as though it was additional earned income.
The calculations in determining taxable amount are often tricky for non-accountants. It is recommended that the recipient of SSDI benefits hire a tax professional. The investment in hiring a tax professional may pay for itself in tax savings or in the prevention of emotional and financial complications arising from an IRS audit.
There are several resources that are available concerning the tax implications and SSDI. A few of the resources are:
Benefit Planner: Income Taxes and Your Social Security Benefits
http://www.ssa.gov/planners/taxes.htm
Social Security: Calculation and History of Taxing Benefits
http://www.fas.org/sgp/crs/misc/RL32552.pdf.
Worksheets
http://ww.irs.gov/pub/irs-pdf/p915
Common Abbreviated Terms Used by the Social Security Administration
COMMON ABBREVIATED TERMS USED BY THE SOCIAL SECURITY ADMINISTRATION: The Social Security Administration (SSA) uses many abbreviations and acronyms when SSA processes a disability or SSI claim for benefits.
AC Appeals Council
AG Attorney General
ACE Average Currant Earnings
ALJ Administrative Law Judge
AOD Alleged Onset Date
ATTY Attorney
CE Consultative Exam
CDB Child Disability Benefit
DAA Drug addiction and/or Alcoholism
DDS Disability Determination Service
DHHS Department of Health and Human Services
DHS Department of Human Service
DI Disability Insurance
DIB Disability Insurance Benefit
DO District Office
DOE Date of Entitlement
DOT Dictionary of Occupational Titles
EPE Eligible Period of Entitlement
ER Earnings Record
FCE Functional Capacity Exam
GAF Global Assessment Function
HM Hearing Monitor
HO Hearing Office
IME Independent Medical Exam
LDI Last Date Insured
LDW Last Day Worked
LO Local Office
MDI Medically Determinable Impairment
ME Medical Expert
MRFC Mental Residual Functional Capacity
NOA Notice of Award
NOH Notice of Hearing
ODAR Office of Disability Adjudication and Review
PIA Primary Insurance Amount
PRW Past Relevant Work
RC ALJ Regional Chief Administrative Law Judge
RFC Residual Functional Capacity
RSDI Retirement Survivors and Disability Insurance
SDM Single Decision Maker
SGA Substantial Gainful Activity
SSA Social Security Administration
SSDI Social Security Disability Insurance
SSN Social Security Number
TTW Ticket To Work
TWP Trial Work Period
UWA Unsuccessful Work Attempt
VE Vocational Expert
VR Vocational Rehabilitation
VTC Video Teleconference
WE Wage Earner
When Your Social Security Disability Application Is Filed
Once the applicant files the initial application and other required documents for Social Security Disability Insurance (SSDI) and/or Supplemental Security Insurance (SSI) with the Social Security Administration, (SSA), SSA will refer to the application as a “Claim” and the applicant as the “Claimant”. SSA will schedule a telephone conference with the Claimant to review the information provided in the Claim. If an attorney/representative is assisting the Claimant at the initial application stage, the conference between the Claimant and SSA usually occurs without the attorney/representative.
After the Claimant’s telephone conference with SSA, SSA will request the Claimant’s medical records. SSA will send the Claimant’s file and medical records to the Disability Determining Service (DDS). DDS will conduct a medical review of the Claim and determine eligibility.
We provide this information as a public service. The information provided in this material is of a general nature. All claims for social security disability benefits have unique facts. For specific questions about your claim, you should consult with the Social Security Administration or your representative.
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Making a Claim for Disability and/or SSI Benefits
To apply for disability benefits or SSI benefits, an application for both programs needs to be filed with the Social Security Administration (SSA).
SSA encourages people to file an application on-line through SSA’s webpage, ssa.gov. If the application is filed on-line, the applicant will need to submit to SSA signed medical authorizations and several forms. SSA’s on-line directions will provide the applicant directions on what forms and authorizations the applicant needs to print/complete and send to SSA. After the applicant completes and submits the on-line application, the applicant should print the verification page in the event there is a question as to when the applicant filed the application.
Filing an application can also be done by calling SSA. If a person applies by telephone, SSA will send to the applicant a number of forms to be completed and returned to SSA.
Failure to submit to SSA all required completed forms will prolong SSA making a decision on the claim or result in a denial. Given the importance of winning at the initial application level, it is recommended that the person filing for either SSI or SDI disability benefits consider retaining a qualified attorney/representative.
We provide this information as a public service. The information provided in this material is of a general nature. All claims for social security disability benefits have unique facts. For specific questions about your claim, you should consult with the Social Security Administration or your representative.